Published 4:00 am, Friday, February 4, 2005

Social Security has provided America's senior citizens with a guaranteed retirement income since President Franklin Delano Roosevelt signed it into law 70 years ago, and I believe it would be a dramatic mistake to privatize even part of the system.

Half of all American workers today are not covered by retirement plans. For them, Social Security is it.

More than 4.3 million people receive Social Security benefits in California, including 860,000 of them with no other source of income. We have the highest cost of living in the nation. When we produce new jobs, more than likely they are part-time and minimum wage without adequate pension and retirement benefits. Keeping Social Security intact has become more important than ever.

In his State of the Union speech, the president vowed to "strengthen and save Social Security." But in proposing to carve out private accounts, he offered no specific proposal on how he would shore up Social Security or pay for the privatization.

Over the long run, changes are needed in Social Security, but we need to do it right. Unfortunately, the president's plan would cut Social Security's funding, weaken the program and make its financial problems worse.

With all the "crisis" rhetoric coming from the administration, people are beginning to fear for the future of Social Security. Wednesday night, after months of declaring that Social Security is in crisis, the President went so far as to declare that by 2042 Social Security would be "exhausted and bankrupt." That's simply not true.

We have time to do what we need to do to shore up the program financially. On our side of the aisle, we want to fix it, and I believe we can. There is a difference of opinion over the long-term shortfall of revenues facing Social Security. Using very conservative predictions of U.S. economic growth, the Social Security Board of Trustees -- which includes three members of the president's Cabinet -- has estimated that promised benefits will continue until 2042, even if no changes are made. After 2042, recipients would continue to get 73 percent of their benefits for at least another three decades -- again, with no dramatic changes to the system. But to ensure that the benefits continue at the current level until 2080, $3.7 trillion is needed, according to the trustees.

The nonpartisan Congressional Budget Office says the trustees are under- estimating economic growth; that $2 trillion is necessary to close the gap; that recipients would get all their promised benefits until 2052, even without any revisions in the program; and that they would draw 78 percent of their benefits for three decades, until at least 2080.

These are big numbers. But by making some balanced long-term changes, we can ensure solvency much further into the future. Some have made proposals along the following lines:

-- Raising the annual cap for payroll taxes gradually from the current $90,000 to $143,000, which could provide up to $1.6 trillion over 75 years;

-- Ensuring increases in Social Security benefits are more accurately linked to inflation, which could save $680 billion over 75 years.

-- Repealing President Bush's tax cut for those earning more than $200, 000 and transferring the revenues to Social Security, which could save about $2.9 trillion over 75 years.

One other alternative would be to have the Social Security trustees conduct an independent and comprehensive actuarial evaluation every five years and make recommendations to Congress based on this data. Congress could approve or reject these proposed changes.

These proposals, and others, deserve careful study so that we fully understand the costs and benefits of each. I deeply believe that our nation should take the time to do this analysis, instead of rushing headlong into one plan or another.

The president has suggested that fundamental and dramatic change is needed -- in the form of private accounts. But even the president's own advisers acknowledge his proposal would do nothing to address the Social Security shortfall. In a leaked White House e-mail, Peter Wehner, one of the president's principal advisers, stated, "We simply cannot solve the Social Security problem with Personal Retirement Accounts alone."

In fact, the president's plan to let workers begin diverting up to 4 percent of their income (or two-thirds of their Social Security contribution) to private accounts starting in 2009 would add more than $4.5 trillion in debt over the next 20 years, according to the Center on Budget Policy Priorities. But Bush has not, thus far, said how he would pay for this.

Social Security was never meant to provide more than a safety net -- the average payment today is $10,461 for all future recipients, and the average payout to retirees is $11,458. So in order to ensure additional financial security for our seniors, we also must do much more to promote America's retirement savings. But instead of the president's risky proposal that would provide little additional revenue for beneficiaries, we can make small changes such as automatic enrollment in 401(k) accounts and a simple check-off to enable people to put part of their income tax refund in an IRA account. Some financial experts estimate that these two small changes alone could double the national savings rate.

Americans must do more to prepare for retirement. But we can do it without a fundamental dismantling of Social Security.

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